Compre Reviewer

LAW ON BUSINESS ORGANIZATION

MULTIPLE CHOICE. Choose the best answer. a. Collateral attack

1. Is an obligation to pay a definite sum of money at b. Direct attack
a future date at a fixed rate of interest. c. Quo warranto
a. Corporate bond d. Habeas Corpus
b. Stock bond 9. By this voting method, every stockholder may
c. Property bond vote such number of shares for as many persons as
d. Cash bond there are directors
2. This is the right of existing stockholders to be a. Cumulative voting for one candidate
offered first for any new issue of shares of stock of b. Straight voting
the corporation c. Cumulative voting by distribution
a. Preferential right d. Parallel voting
b. Pre-emptive right 10. A director or trustee may be held liable for
c. Right of first offer damages, except:
d. Pre-subscription right a. He acquires any personal or pecuniary
3. Persons who have agreed to take and pay for interest in conflict with his duty as such
original, unissued shares of a corporation formed or director or trustee
to be formed. b. He is guilty of gross negligence
a. Subscribers c. He willingly discloses adverse interests to
b. Underwriter the corporation
c. Promoters d. He willfully and knowingly votes or assents to
d. Shareholders patently unlawful acts of the corporation
4. Portion of the capital stock which is issued and 11. Powers which are reasonably necessary to
held by persons other than the corporation itself. exercise the express powers and to accomplish or
a. Paid-up capital stock carry out the purposes for which the corporation was
b. Legal capital formed.
c. Outstanding capital a. Incidental powers
d. Subscribed capital b. Express powers
5. Written acknowledgment by the corporation of the c. Inherent powers
interest, right, and participation of a person in the d. Implied powers
management, profits, and assets of a corporation. 13. Which of the following is not an inherent power
a. Certificate of stock of a corporation:
b. shares a. succession
c. par value b. to sue and be sued
d. Preferred share of stock c. to execute promissory notes.
6. Entitles the holder thereof not only to the payment d. to purchase and hold real and personal
of current dividends but also to dividends in arrears. property
a. Preferred share as to assets 14. Right of a stockholder in the cases provided by
b. Preferred share as to dividends law to demand payment of the fair value of his
c. Cumulative preferred share shares in case of an extension of corporate term.
d. Participating preferred share a. Pre-emptive right
7. Shares which has been lawfully issued by the b. Appraisal right
corporation and fully paid for and later reacquired by c. Right of first refusal
it either by purchase, redemption, donation, d. Right of pre-emption
forfeiture or other lawful means. 15. This Is the difference between the total present
a. Redeemable shares value of its assets after deducting losses and
b. Treasury shares liabilities and the amount of its capital stock
c. Preferred shares a. Profits
d. Treasury shares b. Capital assets
8. Document prepared by the persons establishing a c. Retained earnings
corporation and filed with the Securities and d. Trust fund
Exchange Commission containing the matters
required by the Code 16. Dividend payable on unissued or increased or
a. Corporate charter additional shares of the corporation instead of in
b. Certificate of stock cash or in property.
c. Articles of incorporation a. Stock dividend
d. By-laws b. Property dividend
17-18. Corporate existence is questioned in some c. Cash dividend
incidental proceeding not provided by law for the d. Bond dividend
express purpose of attacking the corporate 17. Dividend which is partly in cash and partly in
existence. stocks

BLAW 102 LAW ON BUSINESS ORGANIZATION Page 1

 a. Optional dividend
b. Scrip dividend
c. Cumulative dividend
d. Composite dividend
18. Rules of action adopted by the corporation for its
internal regulations and for the government of its
officers and of its stockholders or members
a. Articles of incorporation
b. By-laws
c. Corporate contract
d. Certificate of incorporation
19. Which among is not a requisite for a valid
meeting of stockholders or members
a. There must be a previous notice
b. There must be a quorum
c. It may be held anywhere
d. It must be called by the proper person
20. The following are the modes by which a
corporation may issue shares of stock except:
a. By making a cash dividend
b. By subscription before and after
incorporation, to original, unissued stock
c. By sale of treasury stock after incorporation
for money, property, or service
d. By subscription to new stocks, when all the
original stocks have been issued and the
amount of the capital stock increased
21. Failure to register a transfer of shares produces
the following effects, except:
a. It is valid and binding as between the
transferor and the transferee
b. It is valid insofar as the corporation is
concerned except when notice is given to the
corporation for purposes of registration
c. It is invalid as against corporate creditors,
and the transferor is still liable to the
corporation
d. It is invalid as against the creditors of the
transferor without notice of the transfer
22. The following are liabilities of a stockholder
except:
a. Liability for watered stock
b. Liability to the corporation for unpaid
subscription
c. Liability for failure to create corporation
d. Liability for dividends lawfully paid
23. Watered stock includes stock which is:
a. Issued without consideration
b. Issued as cash dividend when there are no
sufficient retained earnings or surplus
c. Issued as fully paid when the corporation has
received a greater sum of money than its par
or issued value
d. Issued for a consideration other than actual
cash, the fair valuation of which is greater
than its par or issued value
24. The percentage of stockholdings that will be
considered as substantial for purposes interlocking
directors is a percentage exceeding::
a. Fifty (50%0
b. Twenty (20%)
c. Twenty-five (25%)
d. Thirty (30%)
25. Involuntary dissolution of a corporation may be
effected by:
BLAW 102 LAW ON BUSINESS ORGANIZATION
a. By executive enactment
b. By failure to formally organize and
commence the transaction of its business
within 1 year from date of incorporation
c. By expiration of term provided for in the
amended articles of incorporation
d. By order of the Securities and Exchange
Commission
26. An advantage of a business corporation.
a. The shareholders have unlimited liability
b. The shares of stocks cannot be transferred
without the consent of the other stockholders
c. Its management is centralized in the board of
directors
d. The corporation has no legal capacity to act
as a legal unit
27. One which is limited to selected persons or
members of a family
a. Open corporation
b. Close corporation
c. De jure corporation
d. De facto corporation
28. Those formed or organized for the government
of a portion of the State
a. Public corporations
b. Private corporations
c. Quasi-corporation
d. True corporation
29.They lay the groundwork for corporate existence:
a. Underwriter
b. Subscribers
c. Stockholders
d. Promoters
30.Amount of the capital stock subscribed whether
fully paid or not.
a. Outstanding capital stock
b. Subscribed capital stock
c. Authorized capital stock
d. Paid-up capital stock
31. The articles of incorporation of a stock
corporation under Section 14(8) must state the
following except:
a. The amount of its authorized capital stock in
pesos
b. The number of shares into which it is divided
c. The par value in pesos of each share
d. The amount of authorized stock subscribed
and paid by each on his subscription
32. An example of defect which will preclude the
creation of even a de facto corporation
a. Failure to file articles of incorporation with the
Securities and Exchange Commission
b. Absence of By-Laws
c. Lack of certificate of stock from the Securities
and Exchange Commission
d. The incorporators or a certain number of
them are not residents of the Philippines
33. Which is not a limitation on proxies
a. Proxies must be in writing signed by the
stockholder or member and filed before the
scheduled meeting with the corporate
secretary
b. It is valid only for the meeting for which it is
intended
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 c. Directors or trustees can attend or vote by
proxy at board meetings
d. A continuing proxy must be for a period not
exceeding 5 years at any one time
34. Which is not an attribute of a corporation
a. It is an artificial being
b. It is created by agreement of stockholders
c. It has the right of succession
d. It has only the powers, attributes and
properties expressly authorized by law or
incident to its existence
35. The steps in the creation of a corporation are
a. Subscription, Incorporation, and Dissolution
b. Promotion, Incorporation, and Liquidation
c. Promotion, Incorporation, and Formal
organization and commencement of
business operations
d. Promotion, Subscription, and Formal
organization and commencement of
business operations
36. Who among is disqualified to be elected as a
director in a corporation
a. A person who violated a provision of the
Corporation Code, committed within 6 years
prior to the date of his election
b. A person who was charged with
imprisonment of 12 years
c. A person convicted by final judgment of an
offense punishable by imprisonment of
more than 6 years
d. All of the above
37. One which is so related to another corporation
that the majority of its directors can be elected
either, directly or indirectly, by such other
corporation.
a. Parent or holding corporation
b. Subsidiary Corporation
c. Quasi-corporation
d. Corporation by prescription.
38. Those corporators mentioned in the articles of
incorporation as originally forming and composing
the corporation and who executed and signed the
articles of incorporation as such..
a. Corporators
b. Stockholders
c. Members
d. Incorporators
39. This doctrine requires that a director who, by
virtue of his office, acquires for himself a business
which should belong to the corporation, thereby
obtaining profits to the prejudice of the corporation
should account to the corporation for all such profits
by refunding the same.
a. Director disloyalty doctrine
b. Corporate opportunity doctrine
c. Mandatory refund doctrine
d. Prejudicial opportunity doctrine
40. The following power of the board of directors
cannot be delegated to their subordinates:
a. Ministerial power
b. Discretionary power
c. Administrative power
d. Appraisal power
BLAW 102 LAW ON BUSINESS ORGANIZATION
41 -45. The minimum votes required for the approval
of the following corporate acts:
41. to adopt by-laws
42. to elect directors or trustees
43. to dissolve the corporation
44. to remove directors or trustees
45. to increase or decrease capital
a. a majority of the board of directors or trustees
b. 2/3 of the outstanding capital stock or of the
members entitled to vote
c. a majority of the outstanding capital stock or
of the members entitled to vote
d. a majority vote of the board of directors or
trustees and 2/3 of the outstanding capital
stock or of the members
46. Which of the following dividends cannot be
declared without the approval of the stockholders?
a. Cash dividends only
b. Stock dividends only
c. Other kinds of dividends
d. All kinds of dividends
47. The following positions cannot be held by one
person at the same time
a. President and Secretary
b. Treasurer and President
c. Secretary and Treasurer
d. Both A & B
e. Both B & C
ab. Both A & C
ac. Only A
ad. Only B
TRUE OR FALSE.
48. .The law governing private corporations in the
Philippines is embodied in Batas Pambansa Blg,
86.
49. As a rule, a corporation is not liable for the debts
of its stockholders, and the latter are not
individually liable for the corporate debts.
50. A corporation is created by mere agreement of
the parties.
51. A partnership has no right of succession, while a
corporation has such right.
52. A corporation can only be dissolved with the
consent of the State.
53. Certificate of stock represents the right or
interest of a person in a corporation.
54. The rule is not one stockholder, one vote but
one share, one vote because representation in
a corporation is commensurate to extent of
ownership.
55. Common share of stock is so-called because it
is the stock which private corporations ordinarily
issue.
56. No par value shares are easily sold as the public
is more attracted to buy this kind of shares.
57. Preferred shares may be issued only with a
stated par value.
58. Treasury shares may be issued only when
expressly so provided in the articles of
incorporation.
59. Notice of any meeting may be waived,
expressly or impliedly by any stockholder or
member.
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60. The right to act as a corporation is a natural
right.
61. A corporation can be an incorporator of another
corporation.
62. The 25% subscription and the 25% paid-up
capital is required not only during the
incorporation period but also in case of increase
of the authorized capital stock.
63. A corporation created by special law has no
articles of incorporation.
64.. A corporations right to use its corporate and
trade name is a right in rem.
65 .A corporation commences to have juridical
personality and legal existence from the moment
the Securities and Exchange Commission
issues to the incorporators a certificate of stock
under its official seal.
66 .Contracts between a corporation and third
persons must be made by or under the authority
of its stockholders.
67. Directors or trustees can bind the corporation
only by action taken at a board meeting.
68. In a corporation sole, there is no board of
directors or trustees.
69. There is a prohibition in the law against a
stockholder being a director or officer of two or
more corporation.
70. The Corporation Code prohibits a corporate
officer from occupying the same position in
another corporation organized for the same
purpose.
71. The per diems granted to directors is included in
their total yearly compensation for purposes of
the 10% limitation.
72. Certificates of stock issued by corporations are
required to be sealed with the seal of the
corporation.
73. The Corporation Code contains no prohibition for
a corporation to increase its authorized capital
stocks even if the same has not yet been fully
subscribed.
74. A corporate bond is an obligation to pay a
definite sum of money at a future date at fixed
rate of interest.
75.Any disposition which involves all or substantially
all of the corporate assets made in the ordinary
course of business does not require the approval
of the stockholders or members.
76. Under the trust fund doctrine, the corporation is
not prohibited to use its assets for purpose of its
business.
77. Profits are not dividends until so declared or set
aside by the corporation.
77. Earnings of the corporation which have not yet
been received can be included in the profits out
of which dividends may be paid.
78. The participation of each stockholder in the
earnings of the corporation is based on his total
subscription and not the amount paid by him.
79. Ultra vires acts are acts which are within the
conferred powers of a corporation or the
purposes for which it is created.
80. Until repealed, a by-law is a continuing rule for
the government of the corporation and the
individuals composing it.
BLAW 102 LAW ON BUSINESS ORGANIZATION
81. Directors or trustees can attend or vote by proxy
at board meetings.
82. In a voting trust agreement, a stockholder of a
stock corporation parts with the voting power
only but retains the beneficial ownership of the
stock.
83 Honorary membership in a business corporation
is allowed by law.
84. A stock becomes delinquent upon failure of the
holder to pay the unpaid subscription or balance
thereof within 30 days from the date specified in
the contract of subscription.
85. Corporations which are vested with public
interest are not allowed to be incorporated as a
close corporation.
86. A dissolved corporation continues to exist but
only for a limited purpose and for a limited time.
87. A corporation may properly pay dividends from
accumulated surplus from previous years
although it did not realize any profit in the current
year.
88. A corporation can properly pay dividends if it
realized profit in the current year even if it still
has existing deficit from previous years.
89. A delinquent stock of a stock with unpaid
subscription is not entitled to receive dividends.
90. A management contract with another
corporation shall be approved by the board of
directors and majority of the outstanding capital
stock of both the managing and the managed
corporations.
91 The President, Secretary and Treasurer of a
corporation must be residents of the Philippines.
92. Ultra vires acts are illegal acts and therefore
cannot be performed by a corporation.
93. The power to amend the articles of incorporation
is vested on the stockholders or members and
cannot be delegated to the board of directors
A
94. A corporation can exist even without a seal.
95. All members of an executive committee must be
members of the board of directors.
96. Only the stockholders, by a vote of at least a
majority of the outstanding capital may grant
compensation to the board of directors.
97. A stockholder cannot be a director or officer of
two or more corporations.
98. An example of defect which will preclude the
creation of even a de facto corporation
a. Failure to file articles of incorporation with
the Securities and Exchange Commission
b. Absence of By-Laws
c. Lack of certificate of stock from the
Securities and Exchange Commission
d. The incorporators or a certain number of
them are not residents of the Philippines
99. There is a prohibition in the law against a
stockholder being a director or officer of two
or more corporation.
The Corporation Code prohibits a corporate
officer from occupying the same position in
another corporation organized for the same
purpose.
a. True, True
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 b. False, True
c. False, False
d. True, False
100. The articles of incorporation of a
stock corporation under Section 14(8) must
state the following except:
a. The amount of its authorized capital stock
in pesos
b. The number of shares into which it is
divided
c. The par value in pesos of each share
d. The amount of authorized stock subscribed
and paid by each on his subscription
101. Amount of the capital stock
subscribed whether fully paid or not.
a. Outstanding capital stock
b. Subscribed capital stock
c. Authorized capital stock
d. Paid-up capital stock
MULTIPLE CHOICE.
1. Which among the following is not a characteristic
of a limited partnership
e. The partnership debts are paid out only from
the individual properties of the general
partners
f. A limited partnership is formed by
compliance with the statutory requirements
g. One or more general partners control the
business and are personally liable to
creditors
h. The limited partners may ask for the return of
their capital contributions under the
conditions prescribed by law
2. Is the process of settling the business or
partnership affairs after the dissolution
e. Dissolution
f. Winding Up
g. Termination
h. Cessation
3. Is a person admitted to all the rights of a limited
partner who has died or has assigned his interest
in a partnership
e. Substituted general partner
f. Incoming limited partner
g. Substituted limited partner
h. None of the above
4. The following are the persons liable to render an
account except ______.
e. The winding up partner
f. The surviving partner
g. The person or partnership continuing the
business
h. The limited partner
5. Is that point in time when all partnership affairs
are completely wound up and finally settled. It
signifies the end of the partnership life
e. Termination
f. Winding Up
g. Bankruptcy
h. Dissolution
6. A limited partner (who is not also a general
partner), being merely a contributor to the
BLAW 102 LAW ON BUSINESS ORGANIZATION
partnership without the right to take part in the
management of the business, is not prohibited
from:
e. Receiving or holding as collateral security
any partnership property
f. Receiving a pro rata share of the partnership
assets with general creditors if he is not also
a general partner
g. Receiving any payment, conveyance, or
release from liability if it will prejudice the
right of third persons
h. All of the above
7. By an agreement of all the members stated in the
certificate, preference may be given to some
limited partners over other limited partners as to
the:
e. return of their contributions
f. their compensation by way of income
g. any other matter
h. all of the above
8. Is the change in the relation of the partners
caused by any partner ceasing to be associated
in the carrying on of the business
e. Dissolution
f. Cessation
g. Termination
h. Winding Up
9. The doctrine of __________ allows a partner to
have the power, although not necessarily the
right, to dissolve a partnership, even though his
co-partners wish to continue the business
e. delectus personae
f. limited partnership
g. estoppel
h. general partnership
10. The grounds for dissolution of a partnership by
decree of court are as follows except ______.
e. insanity
f. incapacity
g. death of any partner
h. misconduct and persistent breach of
partnership agreement
11. A partnership may be dissolved without violation
of partnership agreement, except:
e. By the express will of any partner
f. By withdrawal of a partner
g. By expulsion of any partner
h. Termination of the definite term or particular
undertaking
12. ______ deprives the offender during the time of
his sentence of the right to manage his property
and dispose of such property by any act or any
conveyance inter vivos.
e. Insanity
f. Insolvency
g. Civil interdiction
h. Death
13. The certificate shall be cancelled, not merely
amended, when:
e. there is a false or erroneous statement in the
certificate
f. an additional limited partner is admitted
g. a partner is substituted as a limited partner
Page 5
 h. the partnership is dissolved other than by
reason of the expiration of the term of the
partnership
14. The following are the requisites in order that the
assignee may become a substituted limited
partner, except:
e. Inspection of the partnership books must be
done first
f. The certificate must be amended
g. The certificate as amended must be
registered in the Securities and Exchange
Commission
h. All the members must consent to the
assignee becoming a substituted limited
partner
15. The following are the grounds for dissolution of a
partnership, except:
e. Loss of a specific thing
f. Death of any partner
g. Insolvency of any creditor
h. Civil interdiction of any partner
16. The characteristics of a limited partner are as
follows, except:
e. A limited partnership is formed by
compliance with the statutory requirements
f. One or more limited partners control the
business and are personally liable to
creditors
g. The limited partners may ask for the return of
their capital contributions under the
conditions prescribed by law
h. All of the above
17. The certificate of limited partnership must state
the following, except:
e. The character of the business
f. The right, if given, of a limited partner to
demand and receive property other than
cash in return for his contribution
g. The right, if given, of the partners to admit
additional limited partners
h. The share of the profits or the other
compensation by way of income which each
general partner shall receive by reason of his
contribution
18. The following are authorized to wind up the
affairs of the partnership:
e. The partners designated by the agreement
f. The legal representative of the last surviving
partner, not insolvent
g. All of the above
h. None of the above
19. A general partner or all of the general partners
have no authority to:
e. Admit a person as a general partner
f. Do any act which would make it possible to
carry on the ordinary business of the
partnership
g. All of the above
h. None of the above
20. The manner of winding up of the dissolved
partnership may be done either:
e. with the intervention of the court
f. extrajudicially or by mutual agreement
g. judicially or extrajudicially
h. judicially or by decree of court
BLAW 102 LAW ON BUSINESS ORGANIZATION
21. The specific rights of a limited partner in the
partnership are as follows, except:
e. To inspect and copy at any hour partnership
books or any of them
f. To demand true and full information of all
things affecting the partnership
g. To ask for dissolution and winding up by
decree of court
h. To demand a formal account of partnership
affairs whenever circumstances render it just
and reasonable
22. A limited partner is considered as trustee for the
partnership for:
e. Money wrongfully paid or conveyed to him on
account of his contribution
f. Specific property of the partnership which
had been wrongfully returned to him
g. Specific property stated in the certificate as
contributed by him but which he had not
contributed
h. All of the above
23. On application by or for a partner, the court shall
decree a dissolution whenever:
e. The business of the partnership can only be
carried on at a loss
f. A partner becomes in any other way
incapable of performing his part of the
partnership contract
g. All of the above
h. None of the above
24. The following are the requirements to amend a
certificate, except:
e. The amendment must be in writing
f. Approval of the Securities and Exchange
Commission of the amendment
g. It must be signed and sworn to by all the
members
h. The certificate, as amended, must be filed for
record in the Securities and Exchange
Commission
25. Which among is a right of a partner who has not
caused the dissolution wrongfully
e. To be released from all existing and future
liabilities of the partnership
f. To have the surplus, if any, applied to pay in
cash the net amount owing to the respective
partners
g. To possess partnership property should they
decide to continue the business
h. To have the partnership property applied to
discharge the liabilities of the partnership
TRUE OR FALSE.
1. Dissolution may be caused involuntarily when a
supervening event makes the business itself of
the partnership unlawful.
2. If the loss occurred after the delivery of the thing
promised, then the partnership is dissolved.
3. A limited partner contributes money or property
to the partnership but not services.
4. The creation of a limited partnership is a formal
proceeding and is not a mere voluntary
agreement as in the case of a general
partnership.
Page 6
5. A strict compliance with the legal requirement for
the formation of a limited partnership is not
necessary.
6. An insolvent partner has authority to act for the
partnership.
7. The dissolution of a partnership does not of itself
discharge the existing liability of a partner.
8. If one is induced by fraud or misrepresentation
to become a partner, the contract is void.
9. Upon liquidation, partners do not have the
implied authority to sell partnership property and
to collect obligations due to the partnership.
10. The contribution of each limited partner must be
paid before the formation of the limited
partnership.
11. After a limited partnership has been formed,
additional limited partners can no longer be
admitted.
12. The individual property of a deceased partner
shall be liable for all obligations of the
partnership incurred while he was a partner.
13. Any change in membership dissolves a
partnership and creates a new partnership.
14. No liquidation is necessary when there is already
a settlement or an agreement as to what each
partner shall receive.
15. A general partner is personally liable for
partnership obligations while a limited partners
liability extends only to his capital contribution.
16. In determining the liabilities of the partnership,
the liabilities to the limited partners for their
contributions and to general partners, whether
for contributions or not, are included.
17. Unless otherwise stipulated, every partner is
considered the agent of the partnership with
authority to bind the partnership as well as the
other partners with respect to the transaction of
its business.
18. The general partners have the power to bind the
limited partners beyond the latters investment in
the partnership.
19. Any partner may cause the dissolution of the
partnership at any time without the consent of his
co-partners at his sole pleasure.
20. A person has notice of a fact not only when he
has actual knowledge thereof, but also when he
has knowledge of such other facts as in the
circumstances show bad faith.
21. A partner may be a general partner and a limited
partner in the same partnership at the same time
even if it is not stated in the certificate.
22. The partnership agreement cannot provide that
that the death, withdrawal, or admission of a
partner will not effect a dissolution.
23. If the business is continued by the remaining
partners under the right given in the certificate or
with the consent of all the members, the
certificate of limited partnership need not be
amended.
24. A limited partner may not be an industrial partner
without being a general partner.
25. Limited partnership is formed where there has
been substantial compliance in good faith with
the requirements of the law.
BLAW 102 LAW ON BUSINESS ORGANIZATION
26. The individual property of a deceased partner
shall not be liable for obligations of the
partnership incurred while he was a partner.
27. Persons who extended credit to the partnership
prior to its dissolution must have knowledge or
notice of the dissolution to relieve the partnership
from liability.
28. The liabilities of a limited partner may be waived
or compromised.
29. The limited partner is not liable for the difference
between the amount of his actual contributions
and that stated in the certificate of limited
partnership.
30. The substitution of a person as a limited partner
in place of an existing limited partner does not
necessarily dissolves the partnership.
31. The dissolution being by act of any partner, the
partner acting for the partnership must have
notice of the dissolution.
32. Dissolution terminates the partnership.
33. Where there are several limited partners the
members may agree that one or more of the
limited partners shall have a priority over other
limited partners as to the return of their
contributions.
34. The interest of the debtor-partner charged with
the payment of the unsatisfied amount of the
judgment debt may be redeemed with
partnership property without the consent of the
partners whose interest are not so charged or
sold.
35. The cancellation of a certificate of partnership
need not be signed by all the members for as
long as it is filed with the Securities and
Exchange Commission.
36. Even if a limited partner has contributed
property, he has only the right to demand and
receive cash for his contribution.
37. The name of the general partner may appear in
the firm name, while, as a general rule, that of a
limited partner must not.
38. The partnership debts are paid out of the
common fund and the individual properties of the
general and limited partners.
39. The rights of a limited partner are greater than
those of a general partner.
40. There is no prohibition against a limited partner
engaging in business for himself.
26. A limited partner contributes money or property
to the partnership but not services.
The creation of a limited partnership is a formal
proceeding and is not a mere voluntary
agreement as in the case of a general
partnership.
a. True, True
b. False, True
c. False, False
d. True, False
27. Is a person admitted to all the rights of a limited
partner who has died or has assigned his interest
in a partnership
i. Substituted general partner
Page 7
 j. Incoming limited partner
k. Substituted limited partner
l. None of the above
28. After a limited partnership has been formed,
additional limited partners can no longer be
admitted.
A general partner is personally liable for
partnership obligations while a limited partners
liability extends only to his capital contribution.
a. True, True
b. False, True
c. False, False
d. True, False
29. A limited partner (who is not also a general
partner), being merely a contributor to the
partnership without the right to take part in the
management of the business, is not prohibited
from:
i. Receiving or holding as collateral security
any partnership property
j. Receiving a pro rata share of the partnership
assets with general creditors if he is not also
a general partner
k. Receiving any payment, conveyance, or
release from liability if it will prejudice the
right of third persons
l. All of the above
30. By an agreement of all the members stated in the
certificate, preference may be given to some
limited partners over other limited partners as to
the:
i. return of their contributions
j. their compensation by way of income
k. any other matter
l. all of the above
31. The following are the requisites in order that the
assignee may become a substituted limited
partner, except:
i. Inspection of the partnership books must be
done first
j. The certificate must be amended
k. The certificate as amended must be
registered in the Securities and Exchange
Commission
l. All the members must consent to the
assignee becoming a substituted limited
partner
32. The characteristics of a limited partner are as
follows, except:
i. A limited partnership is formed by
compliance with the statutory requirements
j. One or more limited partners control the
business and are personally liable to
creditors
k. The limited partners may ask for the return of
their capital contributions under the
conditions prescribed by law
l. All of the above
33. A partner may be a general partner and a limited
partner in the same partnership at the same time
even if it is not stated in the certificate.
A limited partner may not be an industrial partner
without being a general partner.
BLAW 102 LAW ON BUSINESS ORGANIZATION
a. True, True
b. False, True
c. False, False
d. True, False
34. The liabilities of a limited partner may be waived
or compromised.
The limited partner is not liable for the difference
between the amount of his actual contributions
and that stated in the certificate of limited
partnership.
a. True, True
b. False, True
c. False, False
d. True, False
35. The certificate of limited partnership must state
the following, except:
i. The character of the business
j. The right, if given, of a limited partner to
demand and receive property other than
cash in return for his contribution
k. The right, if given, of the partners to admit
additional limited partners
l. The share of the profits or the other
compensation by way of income which each
general partner shall receive by reason of his
contribution
36. The substitution of a person as a limited partner
in place of an existing limited partner does not
necessarily dissolves the partnership.
Where there are several limited partners the
members may agree that one or more of the
limited partners shall have a priority over other
limited partners as to the return of their
contributions.
a. True, True
b. False, True
c. False, False
d. True, False
37. A general partner or all of the general partners
have no authority to:
i. Admit a person as a general partner
j. Do any act which would make it possible to
carry on the ordinary business of the
partnership
k. All of the above
l. None of the above
38. Even if a limited partner has contributed
property, he has only the right to demand and
receive cash for his contribution.
The name of the general partner may appear in
the firm name, while, as a general rule, that of a
limited partner must not.
a. True, True
b. False, True
c. False, False
d. True, False
39. The law governing private corporations in the
Philippines is embodied in Batas Pambansa Blg,
86.
Page 8
 As a rule, a corporation is not liable for the debts Preferred shares may be issued only with a
of its stockholders, and the latter are not stated par value.
individually liable for the corporate debts. a. True, True
a. True, True b. False, True
b. False, True c. False, False
c. False, False d. True, False
d. True, False 48. A director or trustee may be held liable for
40. One which is so related to another corporation damages, except:
that the majority of its directors can be elected i. He acquires any personal or pecuniary
either, directly or indirectly, by such other interest in conflict with his duty as such
corporation. director or trustee
a. Parent or holding corporation j. He is guilty of gross negligence
b. Subsidiary Corporation k. He willingly discloses adverse interests to
c. Quasi-corporation the corporation
d. Corporation by prescription. l. He willfully and knowingly votes or assents to
41. Those corporators mentioned in the articles of patently unlawful acts of the corporation
incorporation as originally forming and 49. Powers which are reasonably necessary to
composing the corporation and who executed exercise the express powers and to accomplish
and signed the articles of incorporation as such.. or carry out the purposes for which the
i. Corporators corporation was formed.
j. Stockholders i. Incidental powers
k. Members j. Express powers
l. Incorporators k. Inherent powers
42. A corporation is created by mere agreement of l. Implied powers
the parties.
50. Which of the following is not an inherent power
A partnership has no right of succession, while a of a corporation:
corporation has such right. i. succession
a. True, True j. to sue and be sued
b. False, True k. to execute promissory notes.
c. False, False l. to purchase and hold real and personal
d. True, False property
43. Persons who have agreed to take and pay for 51. A corporation can be an incorporator of another
original, unissued shares of a corporation formed corporation.
or to be formed.
a. Subscribers The 25% subscription and the 25% paid-up
b. Underwriter capital is required is required not only during the
c. Promoters incorporation period but also in case of increase
d. Shareholders of the authorized capital stock.
44. Portion of the capital stock which is issued and a. True, True
held by persons other than the corporation itself. b. False, True
i. Paid-up capital stock c. False, False
j. Legal capital d. True, False
k. Outstanding capital 52. An advantage of a business corporation.
l. Subscribed capital e. The shareholders have unlimited liability
45. Shares which has been lawfully issued by the f. The shares of stocks cannot be transferred
corporation and fully paid for and later without the consent of the other stockholders
reacquired by it either by purchase, redemption, g. Its management is centralized in the board of
donation, forfeiture or other lawful means. directors
a. Redeemable shares h. The corporation has no legal capacity to act
b. Treasury shares as a legal unit
c. Preferred shares 53. Treasury shares may be issued only when
d. Treasury shares expressly so provided in the articles of
46. Document prepared by the persons establishing incorporation.
a corporation and filed with the Securities and
Exchange Commission containing the matters The right to act as a corporation is a natural right.
required by the Code a. True, True
i. Corporate charter b. False, True
j. Certificate of stock c. False, False
k. Articles of incorporation d. True, False
l. By-laws 54. One which is limited to selected persons or
47. No par value shares are easily sold as the public members of a family
is more attracted to buy this kind of shares. e. Open corporation
f. Close corporation
g. De jure corporation

BLAW 102 LAW ON BUSINESS ORGANIZATION Page 9

 h. De facto corporation 1. Which of the following is not among the
55. Those formed or organized for the government consequences of a partnership formed for an
of a portion of the State unlawful purpose:
e. Public corporations i. The instruments or tools and proceeds of the
f. Private corporations crime shall be forfeited in favor of the
g. Quasi-corporation government.
h. True corporation j. The contract is void ab initio and the
56. They lay the groundwork for corporate existence: partnership never existed in the eyes of the
e. Underwriter law.
f. Subscribers k. The profits shall not be confiscated.
g. Stockholders l. The contribution of the partners shall not be
h. Promoters confiscated unless they are instruments or
57. Which is not an attribute of a corporation tools and proceeds of the crime.
a. It is an artificial being
b. It is created by mere agreement 2. One whose liability to third persons extends to
c. It has the right of succession his separate property.
d. It has only the powers, attributes and e. Capitalist partner
properties expressly authorized by law or f. Limited partner
incident to its existence g. Liquidating partner
58. The steps in the creation of a corporation are h. General partner
a. Subscription, Incorporation, and Dissolution
b. Promotion, Incorporation, and Liquidation 3. One who does takes active part and known to
c. Promotion, Incorporation, and Formal the public as a partner in the business, whether
organization and commencement of or not he has an actual interest in the firm.
business operations i. Dormant partner
d. Promotion, Subscription, and Formal j. Silent partner
organization and commencement of k. Secret partner
business operations l. Ostensible partner
59. Who among is disqualified to be elected as a
director in a corporation 4. One wherein the existence of certain persons
a. A person who violated a provision of the as partners is not avowed or made known to the
Corporation Code, committed within 6 years public by any of the partners is called:.
prior to the date of his election i. open partnership
b. A person who was charged with j. ostensible partnership
imprisonment of 12 years k. de facto partnership
c. A person convicted by final judgment of an l. secret partnership
offense punishable by imprisonment of 6
years 5. It comprises all that the partners may acquire by
d. All of the above their industry or work during the existence of the
60. A corporation created by special law has no partnership.
articles of incorporation. i. universal partnership of all present
property
A corporations right to use its corporate and j. limited partnership
trade name is a right in rem. k. universal partnership of profits
a. True, True l. particular partnership
b. False, True
c. False, False 6. . A stipulation which excludes one or more
d. True, False partners from any share in the profits or losses
is ______.
61. A corporation commences to have juridical m. valid
personality and legal existence from the moment n. irregular
the Securities and Exchange Commission o. correct
issues to the incorporators a certificate of stock p. void
under its official seal.
7. The receipt by a person of a share of the profits
Contracts between a corporation and third of a business is prima facie evidence that he is
persons must be made by or under the authority a partner in the business, but no such inference
of its stockholders. shall be drawn if such profits were received in
a. True, True payment as:
b. False, True
c. False, False i. wages of an employee or rent to a
d. True, False landlord
j. the consideration for the sale of a
goodwill of a business or other property
by installments or otherwise

BLAW 102 LAW ON BUSINESS ORGANIZATION Page 10

 k. all of the above 15. The following are the requisites before a
l. none of the above capitalist partner may be obliged to sell his
interest to the others, except:
8. The following are the obligations of the partners i. There is an agreement that even in case of
with respect to the partnership capital, except: an imminent loss of the business the partners
m. To reimburse any amount he may have taken are not obliged to contribute.
from the partnership coffers and converted to j. There is an imminent loss of the business of
his own use. the partnership
n. To pay the agreed or legal interest, if he fails k. The majority of the capitalist partners are of
to pay his contribution on time or in case he the opinion that an additional contribution to
takes any amount from the common fund and the common fund would save the business.
converts it to his own use. l. The capitalist partner refuses to contribute
o. To contribute on the date due the amount he an additional share to the capital.
has undertaken to contribute to the
partnership. 16. The following are the typical incidents of a
p. To answer for eviction in case the partnership, except:
partnership is deprived of the determinate i. A fiduciary relation exists between the
property contributed. partners.
9. The following are the property rights of a j. The partners share in profits and losses
partner, except: k. They have unequal rights in the
m. His right to participate in the management. management and conduct of the partnership
n. His right to dispose of the goodwill of the business
business. l. Every partner is an agent of the partnership,
o. His interest in the partnership. and entitled to bind the other partners by his
p. His rights in specific partnership property. acts, for the purpose of its business.
10. Any partner shall have the right to a formal
account as to partnership affairs: 17. The partnership bears the risk of loss of the
m. If he is rightfully excluded from the things contributed to the partnership in the
partnership business or possession of its following instances, except:
property by his co-partners a. Things contributed to be sold
n. If the right does not exists under the terms of b. Things brought and appraised in the
the agreement inventory
o. all of the above c. Specific and determinate things which are
p. none of the above not fungible where only the use is contributed
11. Includes not only the original capital d. Specific and determinate things the
contribution of the partners, but all property ownership of which is transferred to the
subsequently acquired on account of the partnership
partnership or with partnership funds. 18. Remains unchanged as the amount fixed by
m. Partnership capital agreement of the partners, and is not affected
n. Partnership property by fluctuations in the value of partnership
o. Partnership debts property.
p. Partnership credits a. assets
12. The net income of the partnership for a given b. profits
period of time. c. capital
i. capital d. liabilities
j. credit
k. profit 19. Refers to the assets of the partnership after
l. surplus partnership debts and liabilities are paid and
13. Real property may be registered or owned in the settled and the rights of the partners among
name of ______. themselves are adjusted.
i. the partnership a. Surplus
j. all the partners b. Profit
k. one or more but not all the partners c. Interest
l. all of the above d. Credit
14. Is one in which no time is specified and is not 20. One of the rights withheld from an assignee of
formed for a particular undertaking or venture a partner is his right to:
and which may be terminated anytime by a. receive in accordance with his contract the
mutual agreement of the partners. profits accruing to the assigning partner
i. Limited Partnership b. interfere in the management
j. Particular Partnership c. receive the assignors interest in case of
k. Partnership at will dissolution
l. General Partnership d. avail himself of the usual remedies provided
by law in the event of fraud in the
management

BLAW 102 LAW ON BUSINESS ORGANIZATION Page 11

21. The following are considered acts of strict c. All of the above
dominion, except: d. None of the above
a. Acts for apparently carrying on in the usual 30. Which among is a right of a partner who has not
way the business of the partnership caused the dissolution wrongfully
b. Confess a judgment a. To be released from all existing and future
c. Renounce a claim of the partnership liabilities of the partnership
d. Dispose of the goodwill of the business b. To have the surplus, if any, applied to pay in
22. The liability of all partners with the partnership cash the net amount owing to the respective
for everything chargeable to the partnership for partners
a partners wrongful act or omission. c. To possess partnership property should they
a. subsidiary decide to continue the business
b. solidary d. To have the partnership property applied to
c. pro-rata discharge the liabilities of the partnership
d. jointly
23. The doctrine allows a partner to have the power, TRUE OR FALSE.
although not necessarily the right, to dissolve a 31. The mere sharing of gross returns alone does
partnership, even though his co-partners wish not indicate a partnership.
to continue the business 32. No special form is required for the validity or
a. delectus personae existence of the contract of partnership.
b. limited partnership 33. An industrial partner is exempted from liability
c. estoppel to third persons for the debts of the partnership.
d. general partnership 34. In the absence of any stipulation to the contrary,
24. . The grounds for dissolution of a partnership every partner is an agent of the partnership for
by decree of court are as follows except:. the purpose of its business.
a. insanity 35. As a general rule, a partner is entitled to
b. incapacity compensation for his services to the
c. death of any partner partnership.
d. misconduct and persistent breach of 36. Subpartnership agreements affect the
partnership agreement composition, existence or operation of the firm.
25. A partnership may be dissolved without 37. A partner is a co-owner with his partner of
violation of partnership agreement, except: specific partnership property therefore, the
m. By the express will of any partner rules on co-ownership shall apply.
n. By withdrawal of a partner 38. A partners right in specific partnership property
o. By expulsion of any partner is not assignable.
p. Termination of the definite term or 39. The liability of the partners is subsidiary
particular undertaking because the partners become personally liable
26. It deprives the offender during the time of his only after all the partnership assets have been
sentence of the right to manage his property exhausted.
and dispose of such property by any act or any 40. An admission made by a partner who was no
conveyance inter vivos. longer a partner at the time of the declaration is
m. Insanity admissible in evidence against the partnership.
n. Insolvency 41. If personal property, aside from real property is
o. Civil interdiction contributed, the inventory need not include the
p. Death former.
27. The following are the grounds for dissolution of 42. Articles of universal partnership, entered into
a partnership, except: without specification of its nature, only
i. Loss of a specific thing constitute a universal partnership of all present
j. Death of any partner property.
k. Insolvency of any creditor 43. Persons who are prohibited from giving each
l. Civil interdiction of any partner other any donation or advantage can enter into
28. The following are authorized to wind up the a universal partnership.
affairs of the partnership: 44. The partners may stipulate some other date for
a. The partners designated by the agreement the commencement of the partnership.
b. The legal representative of the last surviving 45. Every partner is a creditor of the partnership for
partner, not insolvent whatever he may have promised to contribute
c. All of the above thereto.
d. None of the above 46. The designation of losses and profits cannot be
entrusted to one of the partners.
29. On application by or for a partner, the court shall 47. Every partner is responsible to the partnership
decree a dissolution whenever: for damages suffered by it through his fault but
a. The business of the partnership can only be he can compensate them with the profits and
carried on at a loss benefits which he may have earned for the
b. A partner becomes in any other way partnership by his industry.
incapable of performing his part of the
partnership contract

BLAW 102 LAW ON BUSINESS ORGANIZATION Page 12

48. A contract of partnership is nominate because it
does not depend for its existence or validity
upon some other contract.
49. The appraisal of the value of the goods
contributed is necessary to determine how
much has been contributed by the partners.
50. A separate creditor of a partner can attach or
levy upon specific partnership property for the
satisfaction of his credit.
51. A partner who makes a secret profit out of the
operation of the partnership is not duty bound to
account such profit or commission with his co-
partner.
52. A partner may assume a separate undertaking
under his name with a third party to perform a
partnership contract or make himself solidarily
liable on a partnership contract.
53. Registration of a partnership is necessary as a
condition for the issuance of license to engage
in business or trade.
54. Partnership is a matter of intention, each party
giving his consent to become a partner.
55. A partnership is essentially a business
enterprise established for profit.
56. Notice to or knowledge of any partner of any
matter relating to partnership affairs operates
as a notice to or knowledge of the partnership
except in case of fraud.
57. A partnership is an organization for production
of income to which each partner contributes one
or both of the ingredients of income which
capital or service
58. The dissolution of a partnership does not of
itself discharge the existing liability of a partner.
59. The individual property of a deceased partner
shall be liable for all obligations of the
partnership incurred while he was a partner.
60. Any change in membership dissolves a
partnership and creates a new partnership.
61. Any change in membership dissolves a
partnership and creates a new partnership.
62. No liquidation is necessary when there is
already a settlement or an agreement as to
what each partner shall receive.
63. Any partner may cause the dissolution of the
partnership at any time without the consent of
his co-partners at his sole pleasure.
64. Persons who extended credit to the partnership
prior to its dissolution must have knowledge or
notice of the dissolution to relieve the
partnership from liability.
65. The dissolution being by act of any partner, the
partner acting for the partnership must have
notice of the dissolution.
66. Dissolution terminates the partnership.

BLAW 102 LAW ON BUSINESS ORGANIZATION Page 13